Frontline (FRO) AI Stock Analysis

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Frontline

(NYSE:FRO)

Rating:77Outperform

Price Target:

$22.00

▲(12.53%Upside)

Frontline's stock is supported by strong financial performance and technical indicators, reflecting efficient cash management and positive market momentum. The fair valuation and dividend yield add to its attractiveness, although some caution is advised due to challenges highlighted in the latest earnings call.

Frontline (FRO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.35B

Dividend Yield3.68%

Average Volume (3M)2.81M

Price to Earnings (P/E)12.5

Beta (1Y)0.50

Revenue Growth0.88%

EPS Growth-45.41%

CountryUS

Employees85

SectorEnergy

Sector Strength73

IndustryOil & Gas Midstream

Share Statistics

EPS (TTM)0.15

Shares Outstanding222,622,900

10 Day Avg. Volume3,671,701

30 Day Avg. Volume2,812,840

Financial Highlights & Ratios

PEG Ratio>-0.01

Price to Book (P/B)1.15

Price to Sales (P/S)0.00

P/FCF Ratio49.09

Enterprise Value/Market Cap1.08

Enterprise Value/Revenue0.60

Enterprise Value/Gross Profit5.98

Enterprise Value/Ebitda1.14

Forecast

1Y Price Target

$17.91

Price Target Upside-8.39% Downside

Rating ConsensusHold

Number of Analyst Covering4

Frontline Business Overview & Revenue Model

Company DescriptionFrontline Ltd., a shipping company, engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers. As of December 31, 2021, the company operated a fleet of 70 vessels. It is also involved in the charter, purchase, and sale of vessels. The company was founded in 1985 and is based in Hamilton, Bermuda.

How the Company Makes MoneyFrontline Ltd. generates revenue primarily through the chartering of its tanker fleet to oil companies and traders. The company utilizes a mix of spot market charters, where vessels are hired for single voyages, and time charters, which involve leasing ships for a set period, typically for months or years. This dual approach allows Frontline to capitalize on fluctuations in charter rates and optimize fleet utilization. Additionally, Frontline may engage in strategic partnerships or joint ventures to enhance its market position and operational efficiency. Factors such as global oil demand, geopolitical events, and changes in regulatory environments significantly influence Frontline's earnings, as they impact charter rates and the shipping industry's overall dynamics.

Frontline Earnings Call Summary

Earnings Call Date:May 23, 2025

(Q1-2025)

% Change Since: 14.93%|

Next Earnings Date:Aug 29, 2025

Earnings Call Sentiment Neutral

The earnings call presents a balanced view with strong TCE performance and cash generation potential as highlights. However, concerns over decreased adjusted profit, increased operating costs, and global growth prospects present challenges. The market dynamics are influenced by sanctions, providing opportunities for compliant oil demand. Overall, the sentiment is cautiously optimistic with a mix of opportunities and challenges.

Q1-2025 Updates

Positive Updates

Strong TCE Performance

Frontline achieved $37,200 per day on VLCC fleet, $31,200 per day on Suezmax fleet, and $22,300 per day on LR2/Aframax fleet in Q1 2025. An increase in booking rates for Q1 with 68% of VLCC days at $56,400 per day, 69% of Suezmax days at $44,900 per day, and 66% of LR2/Aframax days at $36,100 per day.

Solid Liquidity Position

Frontline reported strong liquidity of $805 million in cash and cash equivalents with no meaningful debt maturities until 2030 and no new building commitments.

Substantial Cash Generation Potential

Frontline has a cash generation potential of $332 million or $1.49 per share, with the potential to increase by 100% with a 30% increase from current spot market rates.

Positive Impact of Sanctions

Sanctions leading to a more compliant market, with India and China shunning OFAC-listed vessels, and the potential for increased compliant oil demand.

Negative Updates

Decrease in Adjusted Profit

Adjusted profit in Q1 decreased by $4.7 million compared to the previous quarter, primarily due to a decrease in time charter earnings.

Concerns Over Global Growth Prospects

U.S. policy changes and global trade negotiations pose concerns for global growth prospects, impacting the energy complex and tanker market.

Operating Cost Increases

Operating costs have increased sequentially and year-over-year on a per vessel basis, with current OpEx expenses reported at $8,300 per day.

Company Guidance

During the Q1 2025 earnings call, Frontline plc provided guidance that highlighted various operational and financial metrics. The company's CEO, Lars Barstad, reported that the VLCC fleet achieved a TCE of $37,200 per day, Suezmax $31,200 per day, and LR2/Aframax $22,300 per day. For the ongoing quarter, 68% of VLCC days were booked at $56,400 per day, 69% of Suezmax at $44,900 per day, and 66% of LR2/Aframax at $36,100 per day. Financially, the company reported a profit of $33.3 million, or $0.15 per share, and an adjusted profit of $40.4 million, or $0.18 per share. Time charter revenues decreased to $241 million from $249 million in the prior quarter. Frontline maintained strong liquidity with $805 million in cash and cash equivalents and reported no meaningful debt maturities until 2030. The fleet, consisting of 41 VLCCs, 22 Suezmax, and 18 LR2 tankers, averaged 6.8 years in age, with 99% being ECO vessels. Additionally, the company projected cash generation potential of $332 million or $1.49 per share, with a 30% increase from current spot market levels potentially doubling this figure.

Frontline Financial Statement Overview

Summary

Frontline has shown strong revenue growth and healthy profit margins. However, concerns arise from a declining net profit margin and negative free cash flow, indicating potential future liquidity challenges. The balance sheet reflects moderate leverage, which must be managed carefully.

Income Statement

Very Positive

Frontline has demonstrated strong growth in revenue over the years, with a revenue growth rate of 13.78% from 2023 to 2024. The company maintains healthy margins, including a gross profit margin of 50.96%, an EBIT margin of 38.12%, and an EBITDA margin of 49.20% for 2024. However, the net profit margin decreased from 36.43% in 2023 to 24.17% in 2024, indicating increased costs or other financial challenges.

Balance Sheet

Positive

Frontline shows a solid equity position with an equity ratio of 37.63% as of 2024. The debt-to-equity ratio is 1.60, signifying moderate leverage. While the return on equity (ROE) is 21.17%, indicating effective use of equity, the increasing debt levels could pose future risks if not managed carefully.

Cash Flow

Positive

The cash flow statement reflects a challenging cash flow situation with a negative free cash flow of -178.84 million USD in 2024. There is a decline in operating cash flow from 2023 to 2024. The operating cash flow to net income ratio is 1.49, showing reasonable cash generation relative to net income, but the ongoing negative free cash flow poses a concern.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.05B	1.79B	1.43B	749.38M	1.22B
	Gross Profit
1.04B	761.43M	481.00M	30.61M	536.70M
	EBIT
781.71M	746.67M	442.80M	29.85M	507.80M
	EBITDA
1.15B	1.06B	725.83M	217.24M	628.35M
	Net Income Common Stockholders
495.58M	656.41M	475.54M	-11.15M	412.88M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
417.56M	315.75M	490.81M	115.51M	177.36M
	Total Assets
6.22B	5.88B	4.78B	4.12B	3.92B
	Total Debt
3.75B	3.46B	2.37B	2.37B	2.20B
	Net Debt
3.33B	3.15B	2.12B	2.26B	2.03B
	Total Liabilities
3.88B	3.61B	2.51B	2.46B	2.31B
	Stockholders Equity
2.34B	2.28B	2.27B	1.65B	1.61B
Cash Flow		Free Cash Flow
-178.84M	-775.24M	52.93M	-399.47M	-120.26M
	Operating Cash Flow
736.41M	856.18M	370.89M	62.93M	604.06M
	Investing Cash Flow
-483.40M	-1.24B	-239.47M	-363.06M	-715.97M
	Financing Cash Flow
-147.80M	433.07M	10.03M	223.55M	124.18M

Frontline Technical Analysis

Technical Analysis Sentiment

Positive

Last Price19.55

Price Trends

50DMA

16.98

Positive

100DMA

16.49

Positive

200DMA

17.45

Positive

Market Momentum

MACD

0.58

Negative

RSI

62.42

Neutral

STOCH

82.08

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRO, the sentiment is Positive. The current price of 19.55 is above the 20-day moving average (MA) of 18.09, above the 50-day MA of 16.98, and above the 200-day MA of 17.45, indicating a bullish trend. The MACD of 0.58 indicates Negative momentum. The RSI at 62.42 is Neutral, neither overbought nor oversold. The STOCH value of 82.08 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRO.

Frontline Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INSW	80 Outperform	$2.00B	6.25	17.57%	5.86%	-18.74%	-39.64%
DHT	79 Outperform	$1.95B	10.94	17.04%	5.01%	-5.32%	5.51%
STNG	78 Outperform	$2.26B	3.22	24.68%	3.61%	-7.25%	31.85%
FRO	77 Outperform	$4.35B	12.50	14.79%	3.68%	0.88%	-45.41%
TEN	77 Outperform	$639.91M	4.73	9.22%	8.47%	-3.67%	-8.90%
TNK	75 Outperform	$1.61B	5.00	18.57%	10.71%	-21.27%	-34.25%
Sector *	58 Neutral	$7.56B	3.29	-4.46%	10.00%	0.84%	-49.61%

* Energy Sector Average

Performance Comparison

FRO

Frontline

19.55

-4.31

-18.06%

DHT

DHT Holdings

11.98

1.14

10.52%

STNG

Scorpio Tankers

44.30

-35.13

-44.23%

TNK

Teekay Tankers

46.67

-20.01

-30.01%

TEN

Tsakos Energy Navigation

21.24

-5.13

-19.45%

INSW

International Seaways

40.96

-13.09

-24.22%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.